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12/14/17

Asanko Gold (AKG) and K2 Associates: The most impressive trade of the last 18 months

Wednesday December 13th marked the moment when Asanko Gold (AKG) broke through U$0.47 to the downside, which was the original price target posited by K2 Associates in its short report on the company dated June 27th 2016. We at IKN have followed this trade quite closely over the near 18 months between then and now starting the day after the K2 publication (here) and today we are obliged to pay tribute.

This was the most impressive trade I've witnessed in the last two years. I, along with many others I talked to at the time, was doubtful of the trade (one friend said it was "impressive" and "brave", trader code for reckless), but we knew nothing: Not only has the K2 thesis played out, it's done so almost to the letter and on a near-exact timeline too. This was an example of (nothing short of) brilliant DD outwitting and showing the lies peddled by a company for exactly what they were (and are), a large barrowful of BS that went completely undetected by the hapless and gullible fools in the Canadian sellside. Yes indeed, we should also make clear K2's thesis flew directly in the face of every single brokerage with AKG coverage, to a person they had buy ratings and very fancy price targets on the stock. We also need state that even as the AKG story began to unravel and it became clear K2 had got it right the brokerages insisted on their long calls and often doubled down, so it's unknown how much client money was incinerated by their collective idiocy.  K2 took all their money and, with their target now hit, we can only assume they've taken theit profits. Another house that cashed in of course was Muddy Waters, which made a more public splash when announcing short early this year. By then AKG was a $2-and-bits stock, but K2 was shorting this since U$4.15...credit where due, ladies and gentlemen.

Cut to today and from this point until the end of its life, AKG management will try to blame bad luck, or inaccurate third party reports, or gold price, or whatever else. The truth of AKG, as revealed by the most efficient capitalist measure known to man (short selling for profit), is far more nefarious. The people at the helm of AKG are shameful liars who, if the sector wishes to improve itself, should never grace the boardroom of another mining company again. Or as somebody who has also followed this woeful tale of deceit put it to me earlier this very week;

"If you start with no gold, and you salt the assays, that’s fraud. But if you start with a little bit of gold and then use a computer to add multiples more, well that’s just poor judgment. Bre-X were a bunch of amateurs compared to AKG."